One of the hot posts on LinkedIn Singapore these past few days.

One of the hot posts on LinkedIn Singapore these past few days.
It was posted by Jeremy Tan, Singapore's local VC founder, which quite intuitively explains the problems of the current Southeast Asian VC industry in an easy-to-understand manner.

Not long ago, Secoia Capital reverse-calculated Nvidia sales and Big Tech purchases, expressing concerns about the AI bubble, similar logic.

I've always been concerned about this, but I wonder what the hundreds of millions of dollars in Southeast Asian funds established in recent years will do with Exit later. There is no IPO market in the region where Exit is possible, but when the first generation who went to Nasdaq is struggling?

But it's not just a matter of Southeast Asia. I don't think Korea will be that different.

<Problems and Solutions of Southeast Asian Fund Market>

1. excessive financing
   - Southeast Asian funds raising more funds than needed
   - This is a problem not only for startups, but also for the overall investment ecosystem

2. Fund Economics Analysis
   1) For a $100 million fund:
      • 300% return required for 10 years
      • demand for the return of $300 million
      • $6B EXIT IS REQUIRED, assuming approximately 5% stake in the enterprise
   2) For a $300 million fund:
      • 18 Billion Dollar Exit Needed

3. a gap between reality and reality
   - Southeast Asian market's current maturity makes $18 billion exit unrealistic
   - Very few funds can achieve their goals

4. Reasons for excessive financing
   • Certain institutions' preference for large-scale funds
   • Awareness that 'more is better'
   • High fees due to the increase in operating assets (AUM)

5. a negative effect
   - compulsory allocation of funds
   - Unrealistic Expectations for Founders

6. a solution
   1) Need a reality-based approach
   2) Development of investment logic that is not overly optimistic
   3) Adjusting expectations to meet the actual size and needs of opportunities

7. Warning
   - DPI (Distribution-to-Payment Capital Ratio) Expected to Decline as Current Trends Continue
   - LPs May Avoid Investing in Southeast Asian Market

8. Conclusion
   - Each fund needs to develop its own strategy
   - Realistic objectives and achievements can improve capital confidence across the region